Comment Re:"obsolete metrics like revenues" (Score 1) 90
Agreed.
the run-up on internet stocks _is_ based on ideas. It's based on the idea that nobody really understands the Internet yet, other than the fact that it's going to become pervasive, which means that there is lots of potential. Nobody is really sure how people are going to make $$$ on the net in the long run, and so people are simply placing their bets on the folks that generate a lot of traffic to their sites, or who seem to have cool ideas that might get them there.
However, I think we're at least glimpsing the end of this speculative phase. The 'advertising' gambit has pretty much run it's course, and the verdict isn't too positive. Amazon is still losing money despite being a virtual unqualified success in terms of the experience of actually shopping on the net - people are realizing that market share isn't necessarily worth that much, since the margins are vanishingly small if not negative. Yahoo has 50 kajillion people through it's site every day, but still has very low revenue (relatively speaking).
My guess is that online retailing will be 'successful' in generating lots of traffic/revenue, but the margins and complete lack of customer loyalty will mean that they are not appreciably more profitable than conventional retailers, and that eventually this will come out in the valuations. It's also only really successful in the 'commodity' markets, where people are shopping for items they already know they want - I am yet to be convinced that the web is sufficient to replace in-person shopping in many areas - ie would you buy food on the web?(nothing fresh, for sure) Furniture? (maybe). clothing? (catalogs already have defined this market - the web will take it over, but not turn any more significant profit...)
The only really long-term viable ventures i see right now are subscription-based content providers, but they are far from being ready, since the 'web content should be free' mentality still reigns, and the technology is still evolving. The 'big' web companies in the future will compete with TV and print media in offering content, but since the advertising paradigm that fuels the conventional media doesn't work too well on the web, they'll have to figure out how to charge people for it. This isn't too bad, IMHO - I'd gladly pay 10-15/month for /. in it's current form, but I'm probably the exception.
(I should point out, though, that online brokerages do really make sense to me - huge value-add for their target market. Online banking makes sense to me as well, although I don't quite see the same type of revenue stream.)
the run-up on internet stocks _is_ based on ideas. It's based on the idea that nobody really understands the Internet yet, other than the fact that it's going to become pervasive, which means that there is lots of potential. Nobody is really sure how people are going to make $$$ on the net in the long run, and so people are simply placing their bets on the folks that generate a lot of traffic to their sites, or who seem to have cool ideas that might get them there.
However, I think we're at least glimpsing the end of this speculative phase. The 'advertising' gambit has pretty much run it's course, and the verdict isn't too positive. Amazon is still losing money despite being a virtual unqualified success in terms of the experience of actually shopping on the net - people are realizing that market share isn't necessarily worth that much, since the margins are vanishingly small if not negative. Yahoo has 50 kajillion people through it's site every day, but still has very low revenue (relatively speaking).
My guess is that online retailing will be 'successful' in generating lots of traffic/revenue, but the margins and complete lack of customer loyalty will mean that they are not appreciably more profitable than conventional retailers, and that eventually this will come out in the valuations. It's also only really successful in the 'commodity' markets, where people are shopping for items they already know they want - I am yet to be convinced that the web is sufficient to replace in-person shopping in many areas - ie would you buy food on the web?(nothing fresh, for sure) Furniture? (maybe). clothing? (catalogs already have defined this market - the web will take it over, but not turn any more significant profit...)
The only really long-term viable ventures i see right now are subscription-based content providers, but they are far from being ready, since the 'web content should be free' mentality still reigns, and the technology is still evolving. The 'big' web companies in the future will compete with TV and print media in offering content, but since the advertising paradigm that fuels the conventional media doesn't work too well on the web, they'll have to figure out how to charge people for it. This isn't too bad, IMHO - I'd gladly pay 10-15/month for
(I should point out, though, that online brokerages do really make sense to me - huge value-add for their target market. Online banking makes sense to me as well, although I don't quite see the same type of revenue stream.)
